Accordingly, Congress passed the "Miller amendment" in 1967.36 This legislation did not amend the Medicaid law. Instead, it made possible direct payments to recipients in the adult categorical assistance programs (aid for the aged, blind, and disabled) for the care of persons in ICF's. Several controversies complicated the first few years of ICF's. Regulations were proposed in June 1969 which required minimum Federal standards. Under pressure from State health departments, HEW reevaluated these regulations and the 1967 Miller amendment. With this second look, HEW ruled that the statute, as passed, did not provide the basis for Federal regulation. Accordingly, the new regulations published in June 1970, allowed the States to promulgate their own standards. In short, ICF regulation became totally a State responsibility. The Senate Finance Committee had voiced its concern about the administration of the ICF program as early as February 1970, when it condemned the "wholesale transfer" of patients to the lower level of ICF care. The Finance Committee then proposed to transfer the ICF progra.n from its cash grant status under title XVI of the Social Security Act into XIX (Medicaid), thus providing a base for adequate Federal regulation. The committee wanted to require the Secretary of HEW to set minimum Federal standards. After several unsuccessful attempts, this plan was finally adopted as Public Law 92-223 on December 28, 1971. Interim regulations were not issued until March 5, 1973, and final regulations on January 17, 1974. B. HOW LARGE IS THE MEDICAID NURSING HOME PROGRAM? In 1970, Medicaid outlays reached $4.9 billion, with 39 percent allocated for hospital care and 28 percent for nursing homes. Medicaid payments in 1972 reached $5.2 billion; expenditures for nursing home care 34 percent exceeded expenditures for general and surgical hospital care 31 percent. About 50 percent of the Nation's nursing home bill is now paid by Medicaid.37 C. CONSEQUENCES OF "COST-CUTTING" In discussions leading to enactment of H.R. 1, critics of Medicaid were greatly concerned about the escalating costs, allegedly caused in part by care in excess of patient needs. To be sure, many studies indicate that a large number of the patients receiving Medicaid skilled nursing care do not need this level of care. Notable in this regard is the May 28, 1971, General Accounting Office audit of New York, Oklahoma, and Michigan. When one definition of skilled nursing was applied in Michigan, the General Accounting Office reported that 40 percent of the patients did not need skilled nursing. When another definition was employed, 79 percent of the patients did not need skilled nursing. The primary target of the audit was not Public Law 90-248, Section 250. Introduced by former Senator Jack Miller of Iowa. 37 Page 150, Budget Analyses cited in footnote 2. overutilization, as much as the lack of any uniform definition among the States as to the definition of "skilled nursing." 38 By no stretch of the imagination can it be said that a substantial number of patients in America's skilled nursing homes do not need care. What can be stated is that some need a different level of care. In turn, the number of people who fall into each category will be determined by the definitions employed for each level of care. Consumer advocates who recognized the validity of these arguments opposed direct cuts. Instead, they argued for implementation of "medical review"-a patient-by-patient evaluation of the quality of care— as the means of matching patients with the appropriate level of care and saving dollars. H.R. 1 was enacted to resolve these conflicting positions. But on balance, it gave greater emphasis to cost consideration over patient need.39 In February 1970, President Nixon announced in his budget message that he would seek to abolish 57 agencies of the Government which had outlived their usefulness. His message included a request to trim $235 million in Medicaid costs.40 41 The Presidential request passed the House of Representatives as an amendment to the Medicare and Social Security reform bill. The House version proposed to cut costs by requiring the following: (1) A one-third reduction in Federal Medicaid matching money paid to nursing homes after an individual had received 90 days of care. (2) A complete cutoff of Federal funds after a mental hospital patient received a lifetime total of 375 days of care. (3) A one-third reduction in Federal funds after an individual received 60 days of care in a tuberculosis hospital. THE CONGRESSIONAL RESPONSE In a bipartisan rebuttal, five members of the U.S. Senate Special Committee on Aging opposed this amendment as unfair, problematic and certainly not the way to end the alleged overutilization of Medicaid facilities. Senator Harrison Williams, then chairman of the Committee on Aging, stated: 42 What is puzzling is that in the early 1960's our hear- 38 "Problems in Providing Care to Medicaid Patients in Skilled Nursing Homes," U.S. General Accounting Office, May 28, 1971. 39 HEW estimated a reduction in Medicaid costs under P.L. 92-603 of $790 million. For detailed breakdown of this reduction see table in Appendix 2, p. 117. 40 Washington Report on Medicine and Health, February 9, 1970, No. 1180, p. 1. 41 H.R. 17550, Section 225(a). 42 August 4, 1970, press release from the Senate Special Committee on Aging, and Congressional Record of the same day, p. S12705-09. Senator Winston Prouty, ranking minority member, said: The House-passed cutoff provision is based on an erroneous premise that patients in nursing homes do not require inpatient care after 90 days but may be cared for at home. Such a sweeping and general judgment cannot be made by lawmakers; it can only be made on a case-by-case basis by the physician. Senator Vance Hartke, a member of the Committee on Finance, as well as the Committee on Aging, added: It is estimated that New York will lose $105 million, California $20.4 million; and my own State of Indiana estimates a loss of over a million. Compared to the large losses that will be sustained by New York and California, this loss may seem small, but when one considers the condition of most State budgets these days, it means a great deal in terms of services to older people who have no resources of their own. 43 44 Senator Frank E. Moss and Senator Edmund S. Muskie also joined in the colloquy. Because of this discussion, the Senate modified the House provision. This modified version " mandates a one-third reduction in the Federal matching for payments to inpatient hospitals, tuberculosis hospitals, skilled nursing facilities and intermediate care facilities, only if States do not have effective utilization review programs in force. The Federal matching to mental hospitals is reduced by one-third after 90 days. Additionally, this modification requires that intermediate care rates be lower than skilled nursing rates. Accordingly, the compromise version of this amendment had the following effects: (1) Medicaid cutbacks-instead of being applied automatically as in the House measure were to be applied only in States which failed to provide effective utilization review. (2) By HEW estimates, Medicaid costs were reduced by $162 million annually. In theory, utilization review should have a dual purpose: to protect the integrity of Federal and State budgets and to insure that the individual receives the level and quality of care he needs. There is great fear, however, among patient advocates that the first need is being served, but at the exclusion of the second. Some advocates see the effect of this part of H.R. 1 as funneling skilled nursing patients into intermediate care facilities (which are required by law to be less expensive) without regard to questions of their well-being. Ideally, placement of individuals should be dictated by their needs, not by the economic inconvenience of States and the Federal Government. Other sections of H.R. 1 also discourage utilization and reduce State-Federal Medicaid expenditures. Section 208 required States to establish premiums for Medicaid enrollees and allows the States 43 August 4, 1970. press release from the Senate Special Committee on Aging, and Congressional Record of the same day, p. S12705-09. 44 P.L. 92-603, Section 207. to charge copayment and deductibles if such supplementations are "nominal." Some people suggest that there is no such word as "nominal" when applied to the income of Medicaid recipients. HEW projected a savings of $89 million a year because of this proposal.45 Another provision, section 231, was strongly challenged on the Senate floor by Senators Kennedy and Moss. It called for removal of the requirement that States maintain their current level of expenditures under Medicaid. Senator Moss argued that this would open the door for States to back out of their commitment to Medicaid. HEW in fact had projected a $640 million savings in the Federal share because of this amendment. Efforts to delete section 231 were defeated. D. WHOLESALE RECLASSIFICATION OF PATIENTS TO LOWER LEVELS OF CARE As already noted, H.R. 1 unified Medicare and Medicaid standards. In every case where there was to be a reconciliation, the law requires the higher Medicare standards to be retained. This change was hailed as a major step forward because (1) standards would be raised, and (2) there would be only a single set of inspections. But even as the new standards were being promulgated, the question arose: Would the imposition of the higher Medicare standard, with its restrictive definition of skilled nursing, mean wholesale transfers of patients from Medicaid skilled nursing homes into ICF's? To date, HEW has not acted to clarify the definition of "skilled care." Because of this absence of direction, the States have applied the Medicare definition to their Medicaid programs. The urgency of this question may be measured by the estimates of the number of Medicaid skilled nursing patients who could not meet the present Medicare definition. Those estimates range from 2.5 percent to as high as 81 percent.46 As a result, large-scale transfers will take place, and patients will be moved to facilities where present standards require only one licensed practical nurse and "sufficient numbers of personnel." Moreover, former mental patients and individuals with tuberculosis, cerebral palsy, or epilepsy, may be housed in these facilities with the infirm elderly. The result could have a favorable effect on State budg ets but a damaging effect on the individuals. Many of these fears are already being realized: For example, a major focus of the October 1973 hearings conducted by the Subcommittee on Long-Term Care, dealt with the effects of H.R. 1 and the application of the Medicare definition of skilled nursing to Medicaid. Former Congressman David Pryor, testifying on behalf of the American Association of Retired Persons-National Retired Teachers Association, called this change "the seeds of a devastating tragedy." 47 Elaine Brody of the Philadelphia Geriatrics Center predicted the "wholesale dumping of patients into less expensive ICF's." 48 45 See table in Appendix 2, p. 117. 1971. "Problems in Providing Care to Medicaid Patients in Skilled Nursing Homes," May 28, 47 Page 2556, part 21, hearings cited in footnote 3. 48 Page 2796, part 22, hearings cited in footnote 3. Senator Dick Clark reported that only 100 of the present 11,000 patients in his State of Iowa would continue to qualify as "skilled." He added, "According to our State officials that is less than 1 percent." 49 Dr. George Warner, of the New York Department of Health, testified that about 700,000 of the present 1 millon patients in U.S. nursing homes "until now were classifiable as needing the skilled nursing facility level of care with the other 300,000 deemed in need of ICF care. Predictions this morning were that section 247 [of H.R. 1] could cause the reclassification of persons needing skilled nursing or skilled rehabilitation services from 700,000 down to 100,000 and thus cause the reclassification of 600,000 patients to the intermediate care level." 99 50 Both Dr. Warner and Elaine Brody reminded the committee of the sharp increase in mortality and morbidity associated with the transfer of patients from one facility to another and from one part of a facility to another. The phenomenon is commonly called "transfer shock" or "transplantation shock" (see pp. 17-18). Senator Charles Percy expressed the concern that as many as 10,000 patients might die if such large scale transfers were ordered.51 Senator Moss, in a letter to HEW Secretary Caspar Weinberger, requested that patient needs, not fiscal concerns, be the primary consideration in determining where patients were housed. At the same time, the Senator directed a questionnaire to the executive director of each State's nursing home association to determine if wholesale reclassifications were underway and if patients were being reclassified and transferred. Questionnaire findings establish that reclassification of both patients and facilities is underway on a large scale. At least half of the States report reclassification of facilities from higher to lower levels of care; 23 States report reclassification and movement of patients. HEW has neither acknowledged this trend nor admonished the States for their action. Only aggressive action by HEW can counter the current disastrous trend. CALIFORNIA: FORERUNNER OF DISASTER? In California, the Medicaid program is known as Medi-Cal. California pays 50 percent of the costs of this program, and the Federal Government the remaining 50 percent. In anticipation of the enactment of H.R. 1, Gov. Ronald Reagan. by administrative action, cut Medi-Cal nursing home payments by 10 percent.52 Significantly, the new regulations were applied retroactively to the beginning of the Medi-Cal program in 1966. The effect of this action was to require the nursing home industry to return about $45 million to the State of California. The California Superior Court ruled that the Governor's cutback was illegal and the State accordingly repealed its 10 percent cutback.” 49 Page 2755, part 22, hearings cited in footnote 3. 50 Page 2604, part 21, hearings cited in footnote 3. 51 Congressional Record, July 30, 1974. 52 Senior Citizens Sentinel, March 1971. Vol. 29, No. 9, pp. 1-2. 53 Washington Report on Medicine & Health, June 14, 1971, No. 1250. |